The world of property investment offers incredible ways to generate income. Two popular strategies that get a lot of attention are serviced accommodation and the traditional buy-to-let. Both can be fantastic, but they work in very different ways. The key is understanding which one aligns with your personal circumstances and investment goals.
So, let’s compare serviced accommodation and buy-to-let to answer the big question: “What is the best property strategy for you?”
Understanding the Buy-to-Let Strategy
First of all, a buy-to-let property is what most people think of when they consider property investment. You purchase a property, and you rent it out to a long-term tenant. Typically, this is on a contract for six months or more.
The tenants in a buy-to-let property are typically individuals, couples, or families seeking stability. They want to make a home for themselves. They are seeking a reliable and long-term place to live.
The beauty of the buy-to-let strategy is its simplicity. Once you have a good tenant in place, your job is to manage the
property and collect rent. This is a great strategy for investors who want a steady, predictable income without the day-to-day demands of running a business.
“A good buy-to-let property should make a stable, predictable profit each month after expenses.”
You know your income will be consistent because your tenant locks into a long-term contract. This makes it easier to plan your finances and forecast your returns.
The Serviced Accommodation Strategy
Serviced accommodation is a very different game. These short-term let properties can include a house or a one-bedroom apartment, or a larger flat. Instead of a long-term contract, you rent it out on a nightly or weekly basis.
The type of person who rents a serviced apartment is often a traveller. They might be on a city break, a business trip, or a short-term project. They want more space and a more personal experience than a hotel can offer. For example, a family might want a kitchen to cook their own meals. Two couples travelling together might find it much more cost-effective to share a single serviced apartment instead of booking two separate hotel rooms.
The short-term nature of serviced accommodation means you can charge a premium. This is a strategy that can generate a very high income, often much more than a standard buy-to-let.
So, which is the best property strategy?
There are some important things you need to be aware of when it comes to serviced accommodation. Firstly, you are practically running a business. This means you need a full infrastructure in place, including cleaners and maintenance staff who can service the property between guests.
This is a key difference from a buy-to-let.
With a long-term tenant, the day-to-day work is much less.
This is the first reason why a traditional buy-to-let often fits many investors better..
It is more of a hands-off approach.
Secondly, a buy-to-let brings you a far steadier and more reliable income. Once a good tenant is in place, you know your income is secure for at least six months, if not longer. With serviced accommodation, your occupancy rate can fluctuate. There can be periods where the property is empty, which can make your cash flow less predictable.
A good serviced accommodation property should aim for around a 70% occupancy rate to be profitable, and a good buy-to-let brings you a steady and reliable income, whereas serviced accommodation can fluctuate.
Finally, consider the legal side. The buy-to-let market has established clear rules. While these rules can change, the framework is well-defined.
The serviced accommodation market, on the other hand, is still relatively new and lacks the same level of regulation.
Accommodation is a great way to generate high income; my personal favourite for most investors is a buy-to-let property. It is a more secure and steady way to build wealth.
Ready to Start Your Property Journey?
Whether you choose the security of a buy-to-let or the high returns of serviced accommodation, the most important step is to get started. Understanding the pros and cons of each strategy is the best way to make an informed decision.
Contact us today to find the perfect strategy for you.
